One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats

34 Pages Posted: 30 Jun 2009

See all articles by Christian Lessmann

Christian Lessmann

Technology University of Braunschweig; Ifo Branch Dresden; CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Gunther Markwardt

Dresden University of Technology - Faculty of Economics and Business Management

Date Written: May 2009

Abstract

The majority of theoretical and empirical studies on the relationship between decentralization and corruption argues that the devolution of power might be a feasible instrument to keep corruption at bay. We argue that this result crucially depends on the effectiveness of monitoring bureaucrat’s behavior. The benefits of interjurisdictional competition only occur if there is a supervisory body such as a free press, which is often lacking in less-developed countries. Using cross-country data, we analyze the relationship between decentralization and corruption taking different degrees of the freedom of the press into account. Our main finding is that decentralization counteracts corruption in countries with high degrees of press freedom, whereas countries without effective monitoring suffer from decentralization. Our policy implication is that a free press is a necessary pre-condition for successful decentralization programs.

Keywords: decentralization, corruption, freedom of press

JEL Classification: D73, H77, O23

Suggested Citation

Lessmann, Christian and Markwardt, Gunther, One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats (May 2009). CESifo Working Paper Series No. 2662, Available at SSRN: https://ssrn.com/abstract=1419929

Christian Lessmann

Technology University of Braunschweig ( email )

Abt-Jerusalem-Str. 7
Braunschweig, D-38106
Germany

Ifo Branch Dresden ( email )

Poschinger Str. 5
Munich, 01069
Germany

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Gunther Markwardt (Contact Author)

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
D-01062 Dresden, Saxony
Germany
++49 (0)351/463-33972 (Phone)

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